Guarantor Loan FAQs

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We Answer Your Questions

If you are considering a guarantor loan as your personal loan then you or your guarantor may have questions that need answering.

As a borrower, you can find answers to numerous questions on this page. We’ve clustered them into 3 groups, as follows:

Guarantor Loans: The Basics

How much can I borrow?

The largest loan is £20,000, but you can borrow as little as £1,000. The exact amount that will be offered to you will be decided on following receipt of your enquiry and will depend on the lenders’ assessments of your situation. All our lenders operate responsible lending policies and will need to conduct affordability checks. Not all lenders will feel they can offer your desired amount if they consider it is likely to put you under too much financial stress.

Can you accept my application if I have a bad credit history?

This type of loan is perfect for a borrower with a less-than-perfect credit history. Our lenders consider all applicants regardless of their credit history. If you’ve been refused by high street lenders then you should seriously consider a guarantor loan. You will need to be able to demonstrate that the loan repayments are affordable.

Use our “Ultimate Guide to Improving Your Credit Rating” to help you get your credit back on track.
Will I be credit checked?

Lenders will credit check you, but this is as much to do with checking your identity as it is your credit history. All lenders will need to ensure that you are not currently bankrupt or in an IVA. When it comes to checking your identity this is to ensure fraud prevention. Because you are providing a guarantor they will see the guarantor’s trust in you as a key factor in their lending decision. The lender will need to make sure that the guarantor is themselves creditworthy.

Read this guide if you want to know what information is kept in your credit file and that any lender will see if they credit check you.
What is a guarantor?

A guarantor is a person who guarantees to the lender that they will step in and make the monthly loan repayments if you, the borrower, fail to. This is why a lender would consider lending to you even if you have had credit problems in the past. The presence of the guarantor greatly reduces the risk to the lender.

However, when selecting your guarantor you should keep in mind your relationship with them and what the consequenes would be to that relationship if you were unable to make the loan repayments.

Why is a guarantor required for this loan?

If you have already a poor credit history then lenders will be concerned about extending further credit to you. They may refuse to lend more to you or only do so at a high interest rate. However, if you provide a guarantor then the risk of lending is reduced since it is the guarantor who takes the risk and not the lender. This way the lender can offer you a much lower interest rate.

Who is likely to be an acceptable guarantor?

The basic criteria for a guarantor are as follows (varies a little by lender):

  • A UK resident aged 18 to 75
  • A good credit history
  • A regular income (inc. pension)
  • A UK bank account with a debit card
  • Not financially linked to the applicant

We have more detailed information about this.

Note: the guarantor does not have to own their home, but if they do it means you may be able to borrow over £15,000 and obtain a lower-rate loan. Because of the wide variety of lenders on our panel we are able to cater for numerous different circumstances.

Lenders will credit check the guarantor to ensure that should you be unable to make repayments the guarantor can.

How can I find a guarantor?

Your guarantor is going to be someone who knows you well and feels they would want to step in and make your monthly repayments if you could not – so it is most likely to be a family member or an extremely close friend. So, you need to ask yourself who in your family or social network sounds like they would perform this task?

You might be worried about asking them if they would be your guarantor. Don’t be. You’ll probably be surprised how many would agree to it. They may feel very positive towards the idea – if you don’t ask you’ll never know!

Does a guarantor have to be a homeowner?

No. Our broad panel of lenders mean that while we do have some who will only consider homeowner guarantors we have others who will happily consider non-homeowners and tenants.

But keep in mind that if you can provide a homeowner guarantor you:

  • will be able to apply for a larger loan
  • may qualify for a lower cost loan (APR%)

Applying for a Guarantor Loan

How do I apply for a guarantor loan?

Use our free enquiry service to find the lenders who will lend to you in principle. Our service means:

  • You simply complete one short form
  • We don’t charge any fee for this – the deals we offer will be the same as if you went to the lenders direct.
  • We immediately communicate with 99% of the UK’s guarantor loan lenders
  • We instantly tell you which lenders are interested in your application
  • From our results page, you can click through to your chosen lender(s) to complete your loan application.

Our lenders typically use full e-signature technology. This means both you and your guarantor can submit any extra information via their websites and then sign the contract online. Using this technology means it is perfectly possible to get your loan paid to you within 24 hours.

Using our service means you do not need to go direct to any lender saving you considerable time and effort. The other main benefit is that you substantially raise the chances of getting the loan you want by approaching multiple lenders simultaneously.

How fast can I get my loan?

With our lenders having invested in smooth processes and swift online technology it is perfectly possible to get your loan paid out within 24 hours of being accepted. We frequently see examples of this. But, this presumes that you have an acceptable guarantor ready before you complete your application. Having a number of alternative guarantors lined up will also help in case your chosen lender does not accept the first guarantor you offer them.

Tell me about interest & charges

We don’t charge you any fees for using our comparison service!

All lenders are obliged to provide transparency on their interest and charges. There aren’t typically any extra charges over and above the interest costs. Interest is often charged on a daily basis. This is a good thing as it means that you can immediately benefit from making overpayments on your loan – i.e. you can reduce your future interest charges because you have paid off some of the capital early.

Some lenders specify fixed rates for their loans while others say they are variable. You need to make sure that regardless of the lender you fully understand the terms of the loan.

Can I pay off other debts with this loan?

Yes, and this could certainly make sense it would reduce your overall repayments by paying off more expensive debt (i.e. debt consolidation). But be careful about extending the repayments too far as this could potentially increase the total cost of your debt. You need to compare the two alternatives.

Do I have to find a guarantor before I apply?

No. You can use our enquiry service without any need for a specific guarantor. If you do this you can quickly discover your lender options. As you progress your application with your preferred lender(s) you will need to provide them with your guarantor’s details. Once the lender accepts your proposed guarantor both you and your guarantor will need to agree to the terms of the loan.

Can my husband/wife/partner be my guarantor?

Yes, of course, so long as you are financially independent of them. So, you can live at the same address but if you share bank accounts, or make joint mortgage payments, etc it is the duty of the lender to make sure that if you have financial problems those problems don’t put undue stress on the guarantor’s finances. The more financially independent you are of your guarantor the better.

Can my guarantor be retired?

Yes. The fact your guarantor is retired is not an issue. But they need to satisfy the usual guarantor criteria which include upper age limits and minimum income requirements.

I don’t think I can find a guarantor. What can I do?

Well, don’t forget that these days guarantors don’t have to own their home. This typically opens up the options considerably.

Have you thought hard and long about your family and friends? You may be surprised how accommodating they are if you can:

  • demonstrate to them you can afford the repayments
  • show that you are using the loan for a genuinely useful (rather than frivolous) purpose
My guarantor has a bad credit history. What can I do?

Your guarantor is very unlikely to be acceptable to any lender if they have credit problems of their own. You will need to look elsewhere to find a guarantor who has a good credit profile. Keep in mind that the guarantor does not have to own their home; this may allow you to broaden your search.

What forms of identification do you accept?

The requirements depend on the lender and these will be explained in the information they send to you by email or otherwise. The majority of lenders have or will be moving to an “online-only” model. This means that they rarely require any physical documentation from you to prove your identity or that of your guarantor.

Why do I need a debit card?

Lenders currently use debit cards in some cases to collect repayments. This is the fastest and easiest way for them to collect money from customers and provides more security for you.

I don't have a debit card. What can I do?

This may be a problem, but it depends on the lenders who are willing to lend to you (in principle). We suggest you make your enquiry and see which lenders want to lend before talking to them. You do need a bank account, so if you don’t have a debit card you should also talk to your bank about obtaining one.

Have you received my loan application, as I have not had confirmation of a decision yet?

When your credit application has been received by your chosen lender you will be assigned a dedicated caseworker who will aim to process your agreement within 24 hours typically. If the lender needs further information to process your application they will ask you for it. To make sure that your loan application processes quickly you need to make sure that your guarantor is ready to sign the loan agreement.

I have applied for a loan but want to change some of the details. How do I do this?

If you have received confirmation that your loan is with a caseworker please contact them on their direct number. They will then be able to make the changes you need.

I have been accepted and received my loan agreement form. What do I do next?

Nowadays you shouldn’t receive any physical documents and neither should the guarantor. However, in some rare cases, there could be documents to read and sign. If so, read them and if you and your guarantor are happy then sign and return them along with any other supporting documents the lender may have requested. You may also have the option of providing some of this information online.

You have offered me less than I would like. Can you help with a larger amount?

All applications are individually considered. The amount that can be offered will be the largest amount that it is felt can be lent to you at this time. However, once you have successfully made repayments for a number of months your credit limit can be reconsidered and you may be offered a top-up loan. All lenders on our panel offer responsible lending policies.

Living with a Guarantor Loan

Can I make overpayments?

This varies a little by lender, but in general, you have absolute freedom to make overpayments as you wish – to either reduce your payment period or skip payments in the future. The only thing is that you must make at least the normal monthly payment agreed to on your application form. By making overpayments you can reduce the total cost of your loan because less interest will be charged. You can even pay off the entirety of your loan early. Read your lender’s small print for details.

Can I settle my loan agreement early?

You should get in touch with your lender but in general, you may settle the loan agreement at any time. In most cases, there should be no penalties for doing, but do talk to your lender for details.

What happens if I am struggling with the repayments?

If you’re finding it very hard to keep up repayments on your guarantor loan, and have missed a payment, or think you’ll miss one, the most important thing is to talk to your lender. Don’t be afraid to talk to your guarantor lender and your guarantor if you’re having problems repaying. Your lender will need to talk through your situation and understand your circumstances. Once you’ve explained the situation, an alternative repayment plan can be set up with your lender and your guarantor, to help you keep up repayments and prevent the situation from getting worse.

If it gets serious, there are debt advice charities that can help. They can provide guidance, advice and set up a debt repayment plan, all for free.

Some of these charities are StepChange Debt Charity, the Money Advice Trust and Christians Against Poverty.
What happens if I fail to keep up repayments on my loan?

You should remember that the loan agreement is a legal agreement. You have agreed to make monthly repayments for a fixed period of time. If one month, you are unable to make a payment in full or on time then the first thing you need to do is contact your lender. Then you can discuss the situation and work out a new plan. If your ability to repay the loan deteriorates then the lender is within their rights to request the guarantor to step in to make up the missing payments.

Obviously, this situation is to be avoided at all costs as it will:

  • damage your personal relationship with your guarantor
  • harm your credit rating further

This is why lenders operate responsible lending policies and conduct affordability checks. You should never borrow more than you can afford to repay.

What happens if I have a problem with or complaint against the lender?

Talk to your guarantor loan lender first and try to resolve the issue between you. If, after eight weeks, you don’t feel your complaint has been dealt with to your satisfaction, you can contact the Financial Ombudsman Service (FOS). The FOS is an independent adjudicator, unconnected with any financial firm, who tries to resolve the complaint based on all the evidence from both sides.


Guarantor Loans Guide

If you’re uncertain which type of credit might suit you or you have a money problem then one of guides may help you. We summarise each type of loan and its pros and cons, and address issues regarding debt and credit ratings.


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Written/Reviewed by: Amanda Gillam

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